We acted for the trustee in seeking these orders on the basis that the named guardian had lost mental capacity so that the powers of the office of guardian were no longer capable of being performed as envisaged by the settlor.
In a well-reasoned decision, Master Russell concluded that the court had power under its inherent supervisory jurisdiction to remove and replace a guardian of a trust if the circumstances were such as to warrant the exercise of the power. The facts and circumstances of each case needed to be considered, including the terms of the relevant trust instrument.
On the facts of this case, Master Russell was satisfied that the court did have power in its inherent supervisory jurisdiction to replace the named guardian (and appointor) because it was necessary to secure the proper administration and due execution of the trust.
Master Russell drew from the observations of the Court of Appeal in Blenkinsop v Herbert [2017] WASCA 87, including the following observation at paragraph 75 of the Court of Appeal decision as follows:
“There seems to us to be much to be said for the proposition that the court has power to remove a guardian if that is necessary to secure, but not alter, the due execution of the trusts, and that other considerations go to discretion rather than jurisdiction.”
In Blenkinsop, the court was unwilling to make orders to remove and replace the guardians. However, Blenkinsop was distinguished in Dryandra on the basis that the circumstances were different. In Blenkinsop, the court was dealing with a family trust in which 6 persons had been appointed to act as joint guardians. They were unable to act on a unanimous basis because they had a dysfunctional relationship. There was no suggestion that they did not have the capacity to act unanimously if they each chose to do so. In contrast, the named guardian in Dryandra was unable to make decisions because she lacked the mental capacity to do so.
The named guardian in Dryandra lacked capacity at the time she automatically assumed the office on the death of her husband. So she never had the capacity, by will or otherwise, to appoint a replacement. The trust deed did not provide for the automatic disqualification of an appointor or guardian upon incapacity and the variation power was too narrow to change this. This resulted in a position where the powers of the trustee were significantly curtailed and the trust was unable to operate in the manner envisaged by the settlor.
Dryandra is an important decision in the area of trust law. It makes it clear that the court does have power under its inherent jurisdiction to remove and replace a guardian of a family trust and provides guidance around the circumstances in which that power may be exercised.
This article was written by Sally Bruce, Partner Succession & Estates.